Understanding Mandatory Provident Fund
MPF or the Mandatory Provident is a system that assists with the employed population of Hong Kong for their retirement.
MPF system covers:
People who are working full time or part time who has been employed for 60 days or more are covered by MPF.
This is defined as any person who gains income from his or her own product or services without an employee or a partner.
There are also people who are exempted from availing the MPF and these are:
Self-employed licensed hawkers
Employees covered by statutory pension or provident fund schemes
Member of MPF exempted Occupational Retirement Schemes
Expatriates working in Hong Kong with an employment visa for a valid period of no more than 13 months or covered by overseas retirement schemes
Employees of the European Union Office of the European Commission in Hong Kong.
How to Join?
First of all, your employer must enroll you in an MPF scheme of his choice within 60 days of your employment. Some employers would choose more than one MPF scheme so you can choose which one you would prefer. Upon enrollment you, as the employee should complete the MPF employment form that is given to you by your employer, you should specify your fund choice or investment portfolio in the form and then return it to your employer who is responsible of returning the form to the trustee. Remember, before joining any MPF scheme make sure that you understand the rules especially if you are given the choice between two MPF exempted ORSO schemes.
Both you and your employer are required to pay MPF contributions based on your relevant income.
Relevant incomes is the salary, wage, leave pay, fee, commission, bonus, gratuity, perquisite or allowance that is paid to your by your employer that it written in monetary terms but excluding severance payments or long service payments.
For those with less than $7,100 relevant income employers have to pay times 5% of the relevant income while employees don’t have to pay anything.; $7,100 – $30,000, employers and employees have to pay times 5% of the relevant income and for those earning more than $30,000 employers and employees both have to pay $1,500.
Employers are required to pay the contributions for the first 60 days and make regular contributions on or before every 10th day of every month. They are also required to provide monthly pay-records to the employees within seven working days after the contribution has been paid. Employees are not required to make a contribution for the first 30 days of employment.
Managing your Investments
When choosing for your MPF scheme, you should first know the following:
- Annual benefit statements and fund fact sheet issued by your trustee regularly
- Unit price information of MPF funds published by your trustee. These are printed in both Chinese and English
- Relevant data from your trustee are available in both published material or interactive telephone services
If you are changing jobs from one employer to another, you can choose between these two things with your MPF benefits that you have accumulated from your previous employer:
- Transfer of MPF benefits to your contribution account under the MPF scheme of your new employer
- Transfer of MPF benefit to your existing personal account.
If you are satisfied with the MPF scheme chosen by your former employer, you can retain it in a personal account under the scheme of your previous employment.
If you decide to transfer your MPF, download and complete a Scheme Member’s Request for Fund Transfer Form and submit it to your new trustee.
Once you reach the age of 65, you can do the following with your MPF benefits:
- Withdraw by installments
- Withdraw all of your MPF benefit.
- Retain all the MPF benefits for continuous investment.
You can also withdraw your benefit before you turn 65 on the following reasons:
- Early retirement
- Permanent departure from Hong Kong
- Total incapacity
- Terminal illness
- Small balance
If you want to withdraw your MPF benefits, please contact your trustee to obtain relevant forms.